A culinary altcoin is experiencing a profound collapse that shows us what happens when the trust falls out of decentralized assets.
SushiSwap is down 15% this week, and its token value down a whopping 94%, from over $12 at the start of September to $0.75 at press time.
Then there’s the total value locked into the token, which has cratered to about 1/5 of its current value – Yashu Gola at NewsBTC chronicles the deterioration of trust in this digital holding.
“The (TVL) inside it plunged from $1.428 billion on September 12 to circa $289 million as of today,” Gola writes. “That marked withdrawals of almost $1.13 billion in just 24 days, according to data fetched by DeFi Pulse. It further showed investors’ receding confidence in SushiSwap, a project that had promised to outrank its top competitor UniSwap.”
Gola also explains the utility of the metric, offering the following:
“A higher TVL represents trust in the automated market maker industry. It ensures that more people are willing to support the exchange by depositing their capital into its reserves. In return, they anticipate strong incentives, a steady revenue from a portion of the transaction fees, as well as governance rights by holding the native token.”
It’s a chilling story of investor jitters based on a major asset dump that looked, to many, like an exit scam, where divestment by the founder of the coin, known as “chef Nomi” jettisoned a major share of the market cap. Benjamin Pirus at Cointelegraph reported this Sept. 11:
“On Sept. 6, news broke that Nomi had given FTX exchange CEO, Sam Bankman-Fried, control over the SushiSwap project — but not before taking approximately $13 million with them,” Pirus reported. “The funds, which Nomi alone controlled, were from a $27 million dollar developer fund that was meant to buoy the nascent project.”
Sushi puns aside, what this shows crypto fans is that leadership and demonstrated value are important in a decentralized world. Since there’s no institution backing up these assets, it’s critical to have a vibrant community, and not just a few little-known backers who could decide to turn over the apple cart on any given market day. Take a look at your crypto portfolio to make sure you are not overly exposed.